New Gartner forecasts on worldwide semiconductor revenue are expecting the year to close at $198 billion, representing a 22.4 percent reduction from 2008 revenues of $255 billion.
"First quarter PC shipments came in better than expected, which led to an improved outlook for microprocessors, but we believe most of this improvement was due to the fact that inventories had been run down too far, rather than true demand returning," said Gartner research Vice President Bryan Lewis, in a statement on the new data.
As vendors used up their inventory in the fourth quarter of 2008, and into the first two months of 2009, component demand fell "significantly below" PC demand, driving down prices, according to Gartner, which expects component prices to stabilize through the year as inventories are refilled.
"We are expecting 4.9 percent growth in second quarter semiconductor sales based on recent semiconductor company guidance, and this positive movement has caused us to move away from our [first quarter 2009] worst-case scenario of a record down year in 2009," said Lewis in the statement.
He tempered his words by adding that only China showed evidence of demand returning, and the industry was still not "out of the woods." He expected spending to remain depressed, due to unemployment, low housing pricing and low consumer confidence.
And while IT budgets are modestly down, "companies are not spending at the rate of their budgets," Lewis said in the statement.
A May 14 Gartner report found that IT projects, rather than being cancelled, are being delayed by the economy. In the United States, only 29 percent of respondents expected projects to continue as planned.
Gartner reports that application-specific standard product (ASSP) will continue to be the semiconductor revenue leader, and it is forecasted to total $54.9 billion in 2009, a drop of 24.2 percent from 2008.
Second will be the memory market, with expected totals of $39.4 billion, a 16.8 percent decline from 2008, and finally, falling from second place to third, is the microcomponents segment, expected to reach $37.3 billion, for a decline of 23.6 percent from 2008.
Gartner says it has removed solar revenue from its semiconductor forecast, in part because its high growth rates were distorting the actual growth of the semiconductor industry.
In February, IDC also put the semiconductor industry's expected revenue decline at 22 percent, stating that this market was one of the first affected by the recession, which began in late 2007.
IDC does not expect to see year-over-year growth for semiconductor revenues until the second quarter of 2010.